WestPoint Stevens paper drops; Solutia still weighted down; WorldCom better as emergence nears

By Carlise Newman

Chicago, Oct. 17 - WestPoint Stevens Inc. paper dropped a few points Friday on the news that it would seek a new reorganization plan in its bankruptcy case.

WestPoint said it will not implement the previously announced agreement in principle with holders of its outstanding unsecured debt. Instead, the company will negotiate new terms for a chapter 11 plan of reorganization with all its major creditor constituencies (see report on page one of this issue).

WestPoint's 7 7/8% notes due 2008 were down 2 points to 11½ bid, 13 offered, one trader said.

WestPoint also said it is seeking to extend its exclusivity period to file a reorganization plan until March 31, 2004. A hearing to consider the motion is set for Oct. 22.

In addition, WestPoint and the lenders under the DIP Agreement have entered into second and third amendments to the debtor-in-possession agreement.

"The amendments don't mean much. Obviously the fact that they tossed the old plan in favor of this one is interesting. The bonds are just reacting to the general uncertainty of the situation," a trader said.

Solutia Inc. also got some play in distressed debt trading, still weighted by the company's announcement Thursday that it has initiated discussions with its bondholders concerning a restructuring of its debt.

Solutia's 7 3/8% notes due 2027 were seen down 1 points to 59 bid, 61 offered, while its 11¼% notes due 2009 were down 1½ points to 88½ bid, one trader said.

"They steadied a bit today but were still lower across the board. News like this tends to stick," he said. "When there's more information out there we'll probably see them move firmly in one direction. My vote is down."

Solutia has $1.25 billion of funded debt including four series of bonds issued by the company and its subsidiaries. Outstanding bonds include the $223 million 11¼% senior secured notes due 2009; the $150 million 6.72% debentures due 2037 and putable in October 2004; Solutia Europe SA's €200 million 6¼% euro notes due 2005; and the $300 million 7 3/8% debentures due 2027.

The 2009 notes have a second lien on certain working capital but the remaining $680 million in bonds are unsecured. In addition to the bonds the company has a $350 million secured credit facility with a syndicate of lenders lead by Ableco Finance LLC, a unit of Cerberus Capital Management L.P.

Meanwhile, WorldCom paper appeared to be on a roll in the week just completed, despite slipping revenues in the month of August, or news that AT&T Corp. would continue pursuing charges that it was defrauded in federal court.

The bankrupt telephone company said late Tuesday its net income and revenues declined in August from July, blaming lower long-distance calls volume network-wide and higher reorganization expenses.

Nonetheless WorldCom's bonds were seen rising ½ point to end Friday's session at 37 bid, one trader said.

"After all is said and done, it'll come out [of Chapter 11] bigger and stronger, and minus a heavy debt load," a trader said.

Boosted by the proximity of WorldCom's emergence from bankruptcy, the bonds have moved a total of about 7 points during the week after being stuck at levels in the high 20s and low 30s for months. The paper rose steadily 1 to 2 points each session.

In other news, Adelphia Communications Corp. was "really hot" on Friday, one trader said.

"They've been hot all week, but yesterday and today the bonds really took off. There isn't anything for them to trade on other than getting closer to emerging. And the cable sector has been busy," he said.

He said Adelphia's 9 3/8% due 2009 were seen going to 85¼ bid, 85½ offered from 83 bid, 84 offered; other issues traded up in same context. But at another desk, 9 7/8s due 2007 were seen down ½ point to 82½ bid.

Dan River Inc.'s 12¾% notes due 2009, which fell 30 points Wednesday to 45 bid on news of covenant violations and were down another several points to around 40 bid Thursday, continued to plummet. The bonds were quoted as low as 33 bid Friday.

On Tuesday, the Danville, Va. designer, manufacturer and marketer of products for the home fashions and apparel fabrics markets amended its senior secured credit facility, waiving the maximum leverage ratio covenant violation that existed at the end of the third quarter and revising requirements during the fiscal fourth quarter, including the minimum levels of excess availability under the revolver and monthly operating EBITDA, according to a filing with the Securities and Exchange Commission.

A trader saw Telewest Communications bonds up 2-3 points, with the 11% notes 53½ bid, 54½ offered. The lead bankers of the U.K. cable company agreed to its debt restructuring about a week ago.

Loral Space & Communications Inc.'s 10% due 2006 were seen up 1½ points 80 bid, having firmed over last couple of days from the mid-70s. The 9½% bonds moved to 41 bid, 43 offered from 36 bid, 37 offered a few days ago, as interest in the New York based satellite company's satellites heats up.

(Paul Deckelman contributed to this report)

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.